Concept explainers
1.
To prepare: Sale budget of Z manufacturing.
1.
Explanation of Solution
Statement that shows the sales budget of Z manufacturing
Z Manufacturing | ||||
Sales Budget | ||||
Particulars | April ($) | May ($) | June ($) | Total ($) |
Sales unit (A) | 20,500 | 19,500 | 20,000 | 60,000 |
Selling price Per unit (B) | 23.85 | 23.85 | 23.85 | 23.85 |
Total sales | 488,925 | 465,075 | 477,000 | 1,431,000 |
Table (1) |
2.
To prepare: Production budget of Z manufacturing.
2.
Explanation of Solution
Statement that shows the Production budget of Z manufacturing
Table (2)
3.
To prepare: Raw material budget of Z manufacturing.
3.
Explanation of Solution
Statement that shows the raw material budget of Z manufacturing
Table (3)
4.
To prepare: Direct labor budget of Z manufacturing.
4.
Explanation of Solution
Statement that shows the direct labor budget of Z manufacturing
Table (4)
5.
To prepare: Factory overhead budget of Z manufacturing.
5.
Explanation of Solution
Statement that shows the factory overhead budget of Z manufacturing
Table (5)
6.
To prepare: Selling expense budget of Z manufacturing.
6.
Explanation of Solution
Statement that shows the selling expense budget of Z manufacturing
Table (6)
7.
To prepare: General and administrative expense budget of Z manufacturing.
7.
Explanation of Solution
Statement that shows the General and administrative expense budget of Z manufacturing
Table (7)
8.
To prepare:
8.
Explanation of Solution
Statement that shows the Cash budget of Z manufacturing
Table (8)
Working Notes:
Table (9)
9.
To prepare:
9.
Explanation of Solution
Prepare income statement.
Z. Manufacturing | ||||
Income Statement | ||||
For three months ended June 30,2017 | ||||
Particulars | Amount ($) | Amount ($) | ||
Sales | 1,431,000 | |||
Less: Cost of goods sold | 1,191,000 | |||
Gross profit | 240,000 | |||
Less: Operating expenses | ||||
Sales commission | 114,480 | |||
Sales salaries | 9000 | |||
General administrative salary | 36000 | |||
Total operating expense | 159,480 | |||
Earnings before interest and taxes | 80,520 | |||
Less: Interest on long term notes | 13,500 | |||
Interest on short term note | 120 | |||
Earnings before taxes (A) | 66,900 | |||
Less: Income tax | 23,415 | |||
Net income | 43,485 | |||
Table (10) |
Thus, budgeted net income of Z manufacturing is $43,485.
10.
To prepare: Budgeted
10.
Explanation of Solution
Prepare balance sheet
Z. Manufacturing | ||||
Balance sheet | ||||
For three months ended June 30,2017 | ||||
Particulars | Amount ($) | |||
Assets | ||||
Cash | 40,000 | |||
333,900 | ||||
Raw material inventory | 80,000 | |||
Finished goods inventory | 325,540 | |||
Total current assets | 779,440 | |||
Equipment | 730,000 | |||
Less: | 210,000 | |||
Net equipment | 50,000 | |||
Total Assets | 1,299,440 | |||
Liabilities and | ||||
Liabilities | ||||
Accounts Payable | 182,000 | |||
Bank loan payable | 16,752 | |||
Income tax payable | 23,415 | |||
Total current liability | 222,167 | |||
Long term payables | 500,000 | |||
Total liabilities | ||||
Stockholder’s Equity | ||||
Common Stock | 335,000 | |||
242,273 | ||||
Total stockholders’ equity | 577,273 | |||
Total Liabilities and Stockholder’s equity | 1,299,440 | |||
Table (11) |
Working Notes:
Calculation of retained earnings,
Hence, the total of the balance sheet of the Z Manufacturing as on June 30, 2017 is of $1,299,440.
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Chapter 7 Solutions
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